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Federal Reserve Bank of Chicago
Chicago Fed Letter
How much of the decline in unemployment is due to the exhaustion of unemployment benefits?
Luojia Hu
Shani Schechter
Abstract

Prior studies have examined the impact of extended unemployment insurance (UI) benefits on the rise in the unemployment rate in this recession and early recovery. We use real-time microdata from the Bureau of Labor Statistics’ Current Population Survey (CPS) to examine whether there has been a reverse effect recently as benefits have been exhausted. We find that if UI benefits had lasted indefinitely, the unemployment rate would have been cumulatively about 0.1 to 0.3 percentage points higher between October 2009 and January 2011, which represents about 10% to 25% of the decline in the actual rate over that period.


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Luojia Hu & Shani Schechter, "How much of the decline in unemployment is due to the exhaustion of unemployment benefits?" , Federal Reserve Bank of Chicago, Chicago Fed Letter, issue July, 2011.
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Keywords: Unemployment
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